Sales of Stora Enso declined in the 4thQ due to shutdowns of paper machines

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Stora Enso’s 4Q 2013 sales at Euro 2 604 million were Euro 123 million lower than a year ago as sales of paper products declined, partly due to the previously announced permanent shutdowns of paper machines at Kvarnsveden and Hylte mills in Sweden. Operational EBIT was Euro 152 million, an operational EBIT margin of 5.8%, the company said in a press release. 

The Group recorded non-recurring items (NRI) with a negative net impact of approximately Euro 392 million on operating profit and a positive impact of approximately Euro 114 million on income tax in its 4Q 2013 results.

The NRI are fixed asset impairments of Euro 556 million mainly in Printing and Reading, a fair valuation gain of Euro 179 million and related provision release of Euro 7 million on Group plantation assets in China, a production disruption cost of Euro 12 million in Renewable Packaging, Euro 12 million costs related to joint-venture establishment in China, the Euro 8 million settlement cost of a legal case with a supplier at the Group’s equity accounted investment Veracel and a gain of Euro 10 million relating to the Group’s share of the effect of the new tax rate on the equity accounted investment Tornator. 

Full year 2013 sales at Euro 10 544 million were Euro 271 million lower than in the previous year due to permanent machine shutdowns and deteriorating demand and prices in Printing and Reading. Operational EBIT was Euro 52 million lower at Euro 578 million. The operational EBIT margin was 5.5% (5.8%). 

Stora Enso CEO Jouko Karvinen commented on 4Q and full year 2013 results: “We ended the 4Q and the year essentially as expected, with a positive tone from cost reduction and working capital improvement. Both contributed to very strong cash flow from operations, but they are also essential metrics for successfully advancing on our transformation journey.  “Within the Printing and Living Division, Printing and Reading segment was able to deliver solid cash flow for the year despite reduced profitability and long term structural decline on the market. It is yet another proof point that we must and can go on adjusting this business to the realities of the markets we serve. Building and Living segment, which was the first of our businesses to start its cost reduction programme, made progress on its turnaround with clearly value-creating returns.  “Renewable Packaging had a strong last quarter with significant year-on-year improvement in earnings and cash flow. Finally, in Biomaterials the focus was and remains on starting up Montes del Plata Pulp Mill in the early months of 2014, as we said in October. The reports on the degree of completion and quality of the commissioning efforts remain positive.” 

In 1Q 2014 sales are expected to be similar to the Euro 2 604 million and operational EBIT similar or somewhat higher compared with the Euro 152 million in 4Q 2013. Average prices are forecast to improve and fixed costs to decrease from 4Q 2013. Renewable Packaging will be impacted by Guangxi project costs and lost production due to Skoghall Mill recovery boiler incident. -

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